“With a view to the purchasing power of the local market, predicted not to grow over the following 5 – 10 years, which is the Real Estate trend in Bucharest and Romania?”

My interview to www.hotnews.ro , part 7
to read part 1, please press here
to read part 2, please press here
to read part 3, please press here
to read part 4, please press here
to read part 5, please press here
to read part 6, please press here

On Tuesday, 6^th of July I had given an online interview to www.hotnews.ro, the number 1 news site of Romania. I was replying live to the readers’ questions and after this I also gave a short recorded video interview. You can access this interview here:
Ilias Papageorgiadis, investitor in piata imobiliara: La sfirsitul lui 2010 si pe durata anului 2011 vor incepe executarile silite. Atunci vor aparea preturile reale

Today I present to you the seventh (and last) part of this interview.

“In the end of 2010 and during 2011 we will enter into the period of foreclosures. Then we will reach the real prices”

“In 2008, Ilias Papageorgiadis – A real estate player in Romania – was warning that property prices in Romania are inflated. Few people would stop from the madness of buying and selling at huge prices, most of them having contracted a loan in this regard. Now although the market is totally blocked, many owners and developers kept their prices high. Ilias Papageorgiadis Ilias a former journalist from Greece, talks on-line about the future of the real estate market in Romania.

Ilias Papageorgiadis will answer our readers’ questions

Question no 15 Alex
I think the prices are still absurd – and those who did not want to sell for a lower profit or even a small loss, will sell eventually, when the dead line will become due, with a huge (loss). The banks will not indulge them forever, at the certain moment the perspective of the whole recovery of the investment will disappear forever. Now everybody is in the denial phase – denying reality. Banks who financed overpriced projects will not recognize their mistake. The developers are indulged, but the reality is that the market is going down, and if you had sold yesterday you would have got more than today. They must apply a strategy of minimizing the loss. The economy is not going as it should, we see what happened in a half year of recession, and now we know that in 2011 we will still remain in recession. In conclusion the prices cannot grow when the population impoverishes, the companies are slaughtered, the banks are hiding their losses under the rug, unwilling to admit that they invested wrong (probably because all directors in charge are still in office now).  If all of them don’t wake up to reality, this real estate bubble will burst in a really bad way.

Ilias Papageorgiadis
I agree with the major part of your statement. But do not forget that nobody knows where the bottom is and the price limit for each property.

Question no 15 Rome

What do you think about the inflation which is rapidly increasing? (I refer myself here to the global one too) Do you think that the real estate investment is the best protection against inflation?

lias Papageorgiadis
If I respond that I am thinking in this way, you might say “he said this because he sells properties and makes money out of this business. But please tell me how a normal person can otherwise protect himself against inflation? An appropriate investment in real estate can provide a good solution in difficult times and serious long-term profits.

Question no 16 Isac Gabriela

With a view to the purchasing power of the local market, predicted not to grow in the following years (approx. 5 – 10 years) which is the Real Estate trend in Bucharest and Romania.  Is there a Real Estate market in Romania? Or is it just the investors’ wish for a Real Estate market in this country?

Ilias Papageorgiadis
Who told you that the purchasing power in Romania will not grow over the next 5 – 10 years? Whenever something happens, there are people who go to the media and forecast a disaster. Usually they have read an international media analysis and maybe they didn’t understand it or just have pulled it out of its context, to impress the masses. Personally, I am in Romania because I believe in the potential of this country. If I didn’t believe, I would not stay here.

The country has EXCELLENT potential for the years to come, but this is linked to people’s decision, to improve themselves, to solve problems, to show more mutual respect. If the country solves most of its structural problems it will go towards a brighter future with more wealth available to be shared by its citizens. When can we talk about the creation of a market? What are the critical factors leading to the creation of a market? There are many but today I will focus only on two:  Request and offer. Romanians have many needs. The need for a new and better house. The need for a better quality of life. Also the need for better business and social environment. These needs describe the real Romanian Real Estate market.

You read reviews where people write that “one million of new homes are needed. They describe wishes (the fact that some people believe that these wishes are current needs, is another story.) The creation and the expansion of Real Estate market are based on demand. They require targeting at people’s needs and meeting them by offering them solutions. The higher the demand, the higher the prices. To cut the long story short, Real Estate market exists in Romania and it will react after the crisis. Let’s hope it will do it by avoiding the mistakes of the past, becoming much healthier and focused more on people’s needs.